The recently announced National Manufacturing Policy (NMP) offers a series of fiscal incentives, including tax sops, especially for small and medium enterprises (SME). However, the incentives would be given on a case-to-case basis depending on the preparedness of a particular state that wants to attract industry and make it a manufacturing hub.
While the policy is going to be notified by the end of next month, the incentives would be rolled out gradually, depending on how the states come up with first-class cities that would have the potential of getting those benefits.
“If a particular state government aggregates the land (for creating National Investment and Manufacturing Zone) then the fiscal incentives meant for the zones would be given to them. We are only giving them an enabling framework. This is just a framework; a state government might offer more relaxation to industry if it wants to boost manufacturing,” R P Singh, secretary, Department of Industrial Policy and Promotion told Business Standard.
| THE FIRST 7 ZONES TO BE DEVELOPED: 1. Ahmedabad-Dholera Investment Region, Gujarat (900 sq km) 2. Shendra-Bidkin Industrial Park city near Aurangabad, Maharashtra (84 sq km) 3. Manesar-Bawal Investment Region, Haryana (380 sq km) 4. Khushkhera-Bhiwadi-Neemrana Investment Region, Rajasthan (150 sq km) 5. Pithampur-Dhar-Mhow Investment Region, Madhya Pradesh (370 sq km) 6. Dadri-Noida-Ghaziabad Investment Region, Uttar Pradesh (250 sq km) and 7. Dighi Port Industrial Area, Maharashtra (230 sq km) |
The policy, which received the Cabinet’s nod on Tuesday, offers a plethora of other fiscal incentives for manufacturing units that are located outside the zones. However, units located within the zones would get additional incentives.
The first phase of the NIMZ will be established along the Delhi-Mumbai Industrial Corridor (DMIC).
Initially, seven such zones will be created. The first three will come up in Maharashtra, Rajasthan and Gujarat.
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Among the significant incentives that would be given exclusively to NIMZs are viability gap funding according to the guidelines of the ministry of finance, that would be given to the special purpose vehicles (SPV) and polytechnics located inside such zones. Also, the cost of placement cells in an Industrial training institute set up in a NIMZ would be provided by the ministry for the first five years.
The NMZ would also be developed, managed and operated by the SPV, which would be headed by a government official who will be designated the chief executive officer (CEO) of the zone.
The CEO would be responsible for conducting an environmental impact study once the land is procured by the state to create a NIMZ.
The SMEs, which will be located both inside and outside the zones, will be given relief from long-term Capital Gains Tax on sale of a residential property if the proceeds are invested in setting up a new SME firm in the manufacturing sector for buying new machinery and setting up the unit. SMEs that are involved in green manufacturing will be getting more fiscal sops.
The policy, which is the first ever for the country’s manufacturing sector, has also laid down an exit policy for the workers. For the units inside NIMZ, the exit mechanism would be operated through a job loss policy under which workers will be given insurance coverage in the event the unit closes down, which will be 20 days average pay for every completed year of service.
They will also be given the option to operate a sinking fund that will act as a corpus fund through contributions made by the employees.
The first phase of the National Investment and Manufacturing Zone (NIMZ) would be set up along the Delhi-Mumbai Industrial Corridor (DMIC).